Duty demand without fresh notice upheld, but interest cannot be recovered absent a subsisting final direction.

Where duty liability had already attached and the later exercise only quantified the amount due, a fresh show cause notice under Section 11A of the Central Excise Act was not required; the duty demand was therefore upheld. The assessment endorsements on the bills of entry were not treated as provisional assessments under Section 18 of the Customs Act, because the figures were only for bank guarantee purposes and not a final duty determination. Interest, however, could not be sustained because neither the final writ dismissal nor the Supreme Court order created a subsisting operative direction making interest payable; the interest demand was set aside.

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Issues: (i) whether the duty demand could be sustained without issuing a show cause notice under Section 11A of the Central Excise Act when the assessments were not provisional; (ii) whether the demand of interest was legally sustainable.

Issue (i): whether the duty demand could be sustained without issuing a show cause notice under Section 11A of the Central Excise Act when the assessments were not provisional.

Analysis: The assessment endorsements on the bills of entry were held not to amount to provisional assessment under Section 18 of the Customs Act, 1962. The quantification made on the bills of entry was only for facilitating the furnishing and retention of bank guarantees and did not constitute a determination of duty under the Customs Act. In the circumstances, the liability to pay the differential duty had already arisen and the later finalisation merely quantified what was due. On that footing, the demand did not fall within the category requiring a fresh notice under Section 11A of the Central Excise Act.

Conclusion: The duty demand was valid and the objection based on absence of a Section 11A notice failed, against the assessee.

Issue (ii): whether the demand of interest was legally sustainable.

Analysis: The interim order of the High Court did contemplate interest if the importers failed, but the final dismissal of the writ petition did not continue or reiterate any direction that the duty was to be paid with interest. The Supreme Court order also did not create a liability on the assessees to pay interest upon failure in the appeal. In the absence of a subsisting final direction covering interest, the revenue could not sustain the levy by tracing it only to the interim order.

Conclusion: The interest demand was not sustainable and was set aside, in favour of the assessee.

Final Conclusion: The duty demand was upheld, but the levy of interest was annulled, resulting in only partial relief to the assessee.

Ratio Decidendi: Where duty liability has already attached and the dispute concerns only quantification following an interim arrangement, a separate show cause notice under Section 11A is not necessary; however, interest cannot be recovered unless it is supported by a subsisting final adjudication or operative direction creating such liability.

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